Peugeot is to withdraw from all endurance racing with immediate effect.
The French manufacturer, which has been the only challenger to Audi's dominance of sportscars in recent years, made the shock announcement on the day that entries for the inaugural world Endurance Championship closed which means there will be no factory Peugeots in the new series nor at this year's Le Mans 24 Hours - the 80th running of the race.
"This decision has been taken against the backdrop of the challenging economic environment in Europe coupled with a particularly busy year for the Brand in terms of new vehicle launches," Peugeot said in a statement on Wednesday.
"In this context, Peugeot prefers to concentrate its 2012 resources on its commercial performance and, in particular, ensuring the successful launches of the 208, 3008 HYbrid4, 508 RXH, 508 HYbrid4 and 4008 which will take forward the Brand's strategy of moving upmarket and extending its global presence."
The Le Mans 24 Hours organisers, the Automobile club de l'Ouest, expressed their deep disappointment at the news with ACO president, Jean-Claude Plassart, quick to emphasise that the new WEC was set up at the behest of manufacturers such as Peugeot.
"There's no doubt that the hundreds of thousands of fans who flock to Le Mans every year and the millions of viewers who follow the race on TV will regret the French make's absence."
However, in a statement, the ACO remained confident about the prospects for the 2012 WEC.
"With the creation of the new FIA World Endurance Championship, the future of the discipline promises more prestigious than ever," it said.
"The grids of the 24 Hours of Le Mans and the FIA World Endurance Championship 2012 promise to be well filled. This Wednesday, January 18th marks the closing date for entries to both competitions. Many entries have been registered, some from major manufacturers, proof that automobile endurance racing is healthy and dynamic."
Peugeot returned to endurance racing with the diesel-powered 908 HDi in 2007 as a direct competitor to Audi who had switched to diesel power at Le Mans - and won - the previous year.
The two manufacturers have enjoyed many intense battles since then with Peugeot finally loosening the German marque's grip on Le Mans with victory in 2009. Peugeot also tasted success in international sports car series, most recently winning the 2010 and 2011 Intercontinental Le Mans Cup titles, the precursor to the WEC.
The decision means Briton Anthony Davidson has been left without a drive for 2012. He gave his initital reaction to Autosport, saying: "It was such a disappointment to hear the news today. I'm devastated for the Peugeot team and everybody that has worked so hard over the last two years."
Peugeot's withdrawal leaves Audi as the sole remaining manufacturer in the leading prototype LMP1 class for the WEC with newcomer Toyota only scheduled to compete selected races with its as-yet untried hybrid car.
In a cheeky response to the news, Toyota's head of Pr and Motorsport, Scott Brownlee, said via Twitter: "Sorry to see Peugeot pull out of Le Mans for 2012. Maybe the mere sight of our new car scared them" and included a couple of images of the new Toyota Le Mans Hybrid race car for good measure.